Majority
[1907] S.C.R. Conn Stafford Smythe
Appellant;
and
The Minister of National Revenue
Respondent.
Appellant;
and
The Minister of National Revenue
Respondent.
Clarence H. Day
Appellant;
and
The Minister of National Revenue
Respondent.
1969: May 30, June 3; 1969: October 7.
Present: Abbott, Martland, Judson, Ritchie and
Pigeon JJ.
Judgment of the Court
J.-These income tax appeals are the result of re-assessments made by the Minister against the appellants for the 1961 taxation year.
Their appeals to the Exchequer Court' have been dismissed. In my opinion, these further appeals should also be dismissed.
The re-assessments were made on the ground that the appellants had received and failed to report as income for the year 1961 undistributed income of a company-C. Smythe Limited-in which they were shareholders. Their shareholdings in that company were in these proportions:
..........
52%
Conn Stafford Smythe ............
30.8%
Clarence H. Day
16%
..........
1.2%
Ex. C.R.
pay6 sur cette r6partition. Le Ministre a cotis6 a nouveau les appelants en vertu de l'art. 81(1) de la Loi de l'imp6t sur le revenu, S.R.C. 1952, c. 148. La Cour de lIchiquier a confirm6 la cotisation mais a fond6 son jugement sur I'application des art. 137(2) et 8(1) de la Loi. Les contribuables en ont appel6 A cette Cour.
Arrdt: L'appel doit 8tre rejet6.
L'article 81(1) de la Loi s'applique clairement. Il y a eu liquidation et cessation de l'entreprise de l'ancienne soci6t6, bien qu'il soit apparent qu'il n'y a pas eu de liquidation en bonne et due forme aux termes de la Loi sur les liquidations ou des dispositions de liquidation de l'Ontario Companies Act. Il n'est pas n6cessaire d'exprimer une opinion sur la port6e de l'art. 137(2) de la Loi.
APPELS d'un jugement du Juge Gibson de la Cour de lIchiquier du Canada', en matibre d'imp6t sur le revenu, Appels rejet6s.
John J. Robinette, c.r., et J. G. Edison, c.r., pour l'appelant Conn Stafford Smythe.
H. H. Stikeman, c.r., et Bruce Verchare, pour les appelants Conn Smythe et Clarence H. Day. W. B. Williston, c.r., G. W. Ainslie, c.r., et A.
Le jugement de la Cour a 6t6 rendu par LE JUDSoN-Ces pourvois relatifs A l'imp6t sur le revenu sont le r6sultat de nouvelles cotisations 6tablies par le Ministre pour les appelants A l'6gard de I'ann6e d'imposition 1961. Leurs appels A la Cour de l'chiquier' ont 6t6 rejetis. A mon avis, les pourvois A cette Cour devraient aussi 6tre rejet6s.
Les appelants ont 6t6 cotis6s A nouveau parce qu'ils ont requ et n'ont pas d6clar6 parmi leurs revenus pour I'ann6e 1961 le revenu non distribu6 d'une soci&t6-C. Smythe Limited dont ils 6taient actionnaires. Ils d6tenaient les actions de cette soci6t6 dans les proportions suivantes: ...
52.0 p. 100 Conn Stafford Smythe .... 30.8 p. 100 Clarence H. Day ............
16.0 p. 100 A.
1.2 p. 100 R.C.
Judson I.
The Minister took no proceedings against A. M.
Boyd.
In the year 1961 C. Smythe Limited was an active company with substantial assets and "undistributed income on hand"
amounting to
$728,652. When transactions which
I next propose to outline had been completed this undistributed income was in the hands of the shareholders of C. Smythe Limited in the form of $275,336 in cash and $453,316 in the form of non-interest bearing debentures of a newly incorporated company, C. Smythe for Sand
Limited. From this point on I will refer to the two companies as the "old company" and the
"new company". The application for incorporation of the new company is dated December 13,
1961. The letters patent are dated December 15,
1961, although they were not issued and recorded by the Provincial Secretary until January 4, 1962.
This makes no legal difference to the transactions in question.
1. On December 15, 1961, the directors of the old company authorized the sale by the old company of all its assets to the new company.
On December 15, 1961, the directors of the new company met and:
(a) authorized the allotment of 10,000 common shares of the company to the shareholders of the old company in the same proportion as their respective holdings in that company;
(b)
authorized the creation of non-interest bearing debentures not exceeding $2,750,000 to mature 15 December 1981; and
(c) approved the purchase of all the assets of the old company.
On December 20th, F. H. Cameron Ltd.
and Dabne Enterprises (two Vancouver based companies)
agreed to purchase all the issued shares of the old company for cash at dollar for dollar on capital and 95 per cent on undistributed income.
On December 22nd, it was agreed that the closing of this transaction would be in Vancouver on December 28th.
Le Ministre n'a pas form6 de demande contre En 1961, C. Smythe Limited 6tait une soci6t6 active qui avait des avoirs consid6rables et un <revenu en main non distribu6> de $728,652. Lorsque les transactions que je me propose d'exposer ci-aprbs ont 6t6 termindes, ce revenu non distribu6 6tait entre les mains des actionnaires de C. Smythe Limited ($275,336 en espbces et $453,316 en obligations ne portant pas int6ret d'une soci6t6 nouvellement constitude, C. Smythe for Sand Limited). En parlant de ces deux soci6t6s, je dirai maintenant «l'ancienne soci&66 <da nouvelle soci6tb>. La demande de constitution en corporation de la nouvelle soci6t6 est dat6e du 13 d6cembre 1961. Les lettres patentes sont dat6es du 15 d6cembre 1961, bien qu'elles n'aient 6t6 d6livr6es et enregistr6es par le Secr6taire provincial que le 4 janvier 1962. Ce fait ne change rien au caractbre juridique des transactions en question.
1. Le 15 d6cembre 1961, les administrateurs de l'ancienne soci6t6 ont autoris6 la vente de tous ses avoirs A la nouvelle soci6t6.
Le 15 d6cembre 1961, les administrateurs de la nouvelle soci6t6 se sont r6unis et: (a) ont autoris6 la r6partition de 10,000 actions ordinaires de la nouvelle soci6t6 aux actionnaires de l'ancienne soci6t6 en proportion 6gale A leurs parts respectives dans l'ancienne soci6t6;
(b)
ont autoris6 1'6mission d'obligations ne portant pas int6r&t jusqu'A concurrence de $2,750,000 et venant A 6ch6ance le 15 d6cembre 1981; et
(c) ont approuv6 1'achat de tous les avoirs de I'ancienne soci6t6.
Le 20 d~cembre, F. H. Cameron Ltd. et Dabne Enterprises (deux soci6t6s 6tablies A Vancouver) ont consenti A acheter comptant toutes les actions 6mises de I'ancienne soci6t6, A raison d'un dollar pour un dollar de capital et de 95c. pour un dollar de revenu non distribu6. Le 22 d6cembre, il a 6t6 convenu que la transaction pr6cit6e serait conclue h Vancouver le 28 d6cembre.
Judson
Le Juge ludson
On December 27th, final figures for closing were agreed upon, namely:
Le 27 d6cembre, les chiffres d6finitifs pour la transaction ont 6t6 convenus, savoir:
Total assets of the old company (including undistributed income of $728,652) ............
Discount of 5 per cent of undistributed income ............
Add further fee to F. H.
Cameron Ltd. and Dabne
Enterprises Ltd.
........
Purchase price of shares
$2,611,769
$36,433
5,000
41,433
$2,570,336
On December 27th, arrangements were made with the Toronto-Dominion Bank in Toronto whereby the bank made a loan of $316,769 repayable on January 2, 1962, to the new company.
This loan was secured by a fixed deposit of
$800,000, title to which had been transferred by the old company to the new company.
On December 28th, arrangements were made with the Toronto-Dominion
Bank in
Toronto for a draft in the amount of $2,611,769 to be drawn on the Toronto-Dominion Bank in
Vancouver at debit to the new company and made payable to the old company.
On December 28th, the Bank of Montreal in Vancouver opened an account in the name of the old company authorizing F.
Bone (one of his associates) as signing agents.
The Bank also lent $1,285,000 to F.
Ltd. and $1,280,000 to Dabne Enterprises and obtained promissory notes for these amounts, which were credited to the respective accounts of the two companies. Immediately two drafts were drawn upon these accounts for $1,285,168
(F. H. Cameron Ltd.) and $1,285,168 (Dabne)
and made payable to the Toronto-Dominion
Bank, Vancouver.
On December 28th, during the middle hours of the day, simultaneous meetings were held at the head office of the Toronto-Dominion
Bank, Toronto, and the main branch of the
Toronto-Dominion Bank in Vancouver. The outcome of the meetings was that all the shareholders of the old company resigned as officers and directors of that company and its seal, records and share capital were handed over to Cameron and his associates. There was an exchange of
Avoirs de l'ancienne soci- 6t6 compris le revenu non distribu6 de $728,652)
Remise de 5 p. 100 sur revenu non distribu6
$36,433
Plus les honoraires pl6mentaires de F. H.
Cameron Ltd. et Dabne
Enterprises Ltd...........
5,000
$2,611,769 41,433 Prix d'achat des actions
$2,570,336 Le 27 d6cembre, des arrangements ont 6t6 pris avec la Banque Toronto-Dominion A Toronto en vertu desquels la banque accordait un pret de $316,769 A la nouvelle soci6td, remboursable le 2 janvier 1962. Ce prt 6tait garanti par un d6p6t A terme fixe de $800,000, dont le titre avait 6t6 transmis de l'ancienne soci6t6 A la nouvelle soci6t6.
Le 28 d6cembre, des arrangements ont 6t6 pris avec la Banque Toronto-Dominion A Toronto pour une traite au montant de $2,611,769 h tirer sur la Banque Toronto-Dominion h Vancouver au d6bit de la nouvelle soci6t6 et payable A l'ancienne soci6t6.
Le 28 d6cembre, la Banque de Montr6al A Vancouver a ouvert un compte au nom de l'ancienne soci6t6, F.
$1,285,000 A F. H. Cameron Ltd. et $1,280,000 A Dabne Enterprises et obtenu des billets A ordre pour ces montants qui ont ensuite 6 cr6dit6s aux comptes respectifs de ces deux soci6t6s. Deux traites ont 6t6 tir6es imm6diatement sur ces comptes, soit $1,285,168 (F. H. Cameron Ltd.) et $1,285,168 (Dabne) payables A la Banque Toronto-Dominion, Vancouver. Le 28 d6cembre, vers le milieu de la journ6e, des r6unions simultandes ont 6t6 tenues au sirge social de la Banque Toronto-Dominion A Toronto et A la succursale principale de la Banque Toronto-Dominion & Vancouver. Rsultat de ces r6unions: tous les actionnaires de 1'ancienne soci6t6 ont d6missionn6 de leurs postes d'administrateurs et de directeurs de cette soci6t6 et son sceau, ses archives et son capital-actions ont 6t6 remis A Cameron et h ses associ6s. Il y a bank drafts; the Toronto-Dominion draft of
$2,611,769 was credited to the old company's account in the Bank of Montreal, Vancouver, while the Bank of Montreal drafts in the amount of $2,570,336 were transferred to the Toronto- Dominion Bank, Vancouver. In Toronto, the latter bank credited $2,295,000 to the account of the new company and paid out the following amounts:
C. Stafford Smythe ............
C.
..
$143,175
84,763
44,054
3,344
$275,336
And finally, a balance sheet of the new company drawn before these transactions but giving effect to them showed a bank overdraft of
$316,769, paid-up capital of $10,000 and noninterest bearing debentures (which were held by the shareholders) in the amount of $2,285,000, totalling in all $2,611,769.
On January 2, 1962, two cheques, each for a sum of $1,305,600, were drawn against the account of the old company at the Bank of
Montreal, Vancouver, by Cameron and his associate Bone. These were deposited in the accounts of F. H. Cameron Ltd. and Dabne
Enterprises Ltd. and simultaneously, these accounts were debited to repay the loans made by the bank.
On January 2nd (at 4.30) the directors of the old company authorized that company to invest $2,611,200 in preference shares of F. H.
Cameron Ltd. and Dabne Enterprises, which it
In summary, the result of these transactions is as follows:
Party-Partie
Before-Avant
1. Appellants
C. Smythe
C. S. Smythe
C.
Appelants
C. Smythe
C. S. Smythe
C.
Had all but 1.2% of shares of old company and a potential tax liability on the distribution of surplus
Avaient toutes les actions de l'ancienne socidtd (sauf p. 100) et une responsabiliti fiscale gventuelle sur la r&partition des surplus eu un 6change de traites bancaires; la traite Toronto-Dominion de $2,611,769 a 6t6 cr6dit6e au compte de 1'ancienne soci6t6 A la Banque de Montr6al, Vancouver, tandis que les traites de la Banque de Montr6al au montant de $2,570,336 ont t&6 transf6r6es A la Banque Toronto-Dominion, Vancouver. A Toronto, la Banque Toronto- Dominion a cr6dit6 $2,295,000 au compte de la nouvelle soci6t6 et a vers6 les montants suivants: ............
$143,175 C. Stafford Smythe ............
84,763 C.
...........
44,054 ................
3,344 $275,336 Finalement, un bilan de la nouvelle soci6t6, dress6 avant ces transactions mais y donnant effet, indique un solde d6biteur h la banque de $316,769, un capital vers6 de $10,000 et des obligations ne portant pas int6r8t (et d6tenues par les actionnaires) au montant de $2,285,000, soit en tout $2,611,769.
Le 2 janvier 1962, deux chbques, chacun pour un montant de $1,305,600, ont t6 tir6s sur le compte de l'ancienne soci6t6 & la Banque de Montr6al h Vancouver par Cameron et son associ6 Bone. Ceux-ci ont 6t6 d6pos6s aux comptes de F. H. Cameron Ltd. et Dabne Enterprises Ltd. et, en m~me temps, ces comptes ont 6t d6bit6s du remboursement des prits consentis par la banque.
Le 2 janvier h 4 heures 30, les administrateurs de l'ancienne soci6t6 ont autoris6 celle-ci A investir $2,611,200 dans l'achat d'actions privil6gi6es de F. H. Cameron Ltd. et de Dabne Enterprises, ce qui a t fait.
En r6sum6, le r6sultat de ces transactions est le suivant:
After-A prds
Had $275,336 cash plus $2,285,000 debentures plus shares of new company issued for $10,000
Avaient $275,336 en espaces, plus $2,285,000 en obligations, plus des actions de la nouvelle socidtd 6mises pour $10,000
Judson
Before-Avant
Had assets and an active business and undistributed income of $728,652
Avait des avoirs, un commerce actif et un revenu non distribud de $728,652
Incorporated as of December
15, 1961
Constitude le 15 dicembre
Party-Partie
2. Old company
Ancienne socidtd
3. New company
Nouvelle
4. F.
Ltd.
Dabne Enterprises Ltd.
F.
Ltd.
Dabne Entreprises Ltd.
Niant
There is only one possible conclusion from an examination of these artificial transactions and that must be that their purpose was to distribute or appropriate to the shareholders the "undistributed income on hand" of the old company.
No oral or other documentary evidence is needed to supplement this examination. There was, however, an abundance of other evidence. This was a well-considered scheme adopted on the advice of professional advisers after other means of extraction of the undistributed income-including payment of a tax under the provisions of s. 105(b) of the Act-had been weighed and rejected.
In my opinion, s. 81(1) of the Act clearly applies and imposes the taxation demanded by the notices of re-assessment. Section 81(1) reads:
(1) Where funds or property of a corporation have, at a time when the corporation had undistributed income on hand, been distributed or otherwise appropriated in any manner whatsoever to or for the benefit of one or more of its shareholders on the winding-up, discontinuance or re- After-Apr~s
Had preference shares of Cameron companies, a new location in Vancouver, and no business Avait des actions priviligides des socidtis Cameron et un nouveau sige-social t Vancouver, mais aucune activiti commerciale Had the former assets and active business of old company; owed $2,285,000 to its shareholders on debentures
Avait les avoirs et le commerce actif de l'ancienne socidtd; devait en obligations $2,285,000 ses actionnaires
Had a cash fee of $41,433 and shares of old company, which had no business and whose only assets consisted of shares of the Cameron companies
Avait des honoraires paydes en espces de $41,433 et des actions de l'ancienne socidtd, qui n'avait pas d'activiti commerciale et dont les seuls avoirs consistaient en actions des socidtis Cameron
Il n'y a qu'une conclusion possible de l'examen de ces transactions artificielles et c'est que leur seul but 6tait de r6partir ou autrement affecter a l'avantage des actionnaires le <<revenu en main non distribu6> de 1'ancienne soci6t6. Aucune preuve testimoniale ou autre preuve documentaire n'est requise en sus de cet examen. Toutefois, il y avait en plus une surabondance de preuve. C'6tait un plan bien r6flichi adopt6 sur l'avis de conseillers professionnels, apris que d'autres moyens d'obtenir le revenu non distribu6, y compris le paiement d'un imp6t en vertu des dispositions de l'art. 105 (b)
de la Loi, eurent 6t6 consid6r6s et rejetis.
A mon avis, I'art. 81(1) de la Loi s'applique clairement et impose I'imp6t exig6 par les nouveaux avis de cotisation. L'art. 81(1) se lit comme suit:
81. (1) Lorsque, au moment la corporation avait en main un revenu non distribu6, des fonds ou des biens d'une corporation ont, de quelque fagon, 6t6 distribu6s i un ou plusieurs de ses actionnaires, ou autrement affectis a leur avantage, lors de la liquidation, de la cessation ou de la r6organisation Nil
[19701 S.C.R. organization of its business, a dividend shall be deemed to have been received at that time by each shareholder equal to the lesser of
(a) the amount or value of the funds or property so distributed or appropriated to him, or
(b) his portion of the undistributed income then on hand.
It is unnecessary to appeal to any other sections of the Act. This section covers specifically the case before us.
Gibson J. in the Exchequer Court defined the main issue for decision in the following terms:
The main issue for decision is whether or not these transactions resulted in the conferral of a benefit on the appellants within the meaning of subsection (2) of section 137 of the Income Tax Act; and in the event that the decision on the main issue is in the affirmative, a subsidiary issue for decision is whether the amount of such benefit should be assessed under section 8(1) or section 81(1) of the
With respect, it is unnecessary and undesirable that the issue should be defined in these terms.
I think the case is plainly covered by s. 81(1)
of the Act and that it is unnecessary to express any opinion on the scope of s. 137(2) of the
Act.
There appears to be no doubt that the reassessments were made under s. 81(1) of the
Act on the basis that there had been a windingup, discontinuance or reorganization of the old company. Gibson J. was in doubt on this point although he expressed the opinion that had he been the assessor, he would have come to the conclusion that there was no winding-up, discontinuance or reorganization of the business of the old company within the meaning of s. 81(1).
With this opinion I do not agree and I would base my judgment on this section and this section alone. These assessments should be made under this section with the necessary consequences of a tax credit under s. 38(1). This, I understand, is what the assessor did.
(a) du montant des fonds ou de la valeur des biens ainsi distribu6s ou h lui affectis, ou
(b) de sa portion du revenu non distribu6 alors en main.
Il n'est pas necessaire de s'en rapporter h aucun autre article de la Loi. Celui-14 s'applique pr6cis6ment A l'affaire qui est devant nous.
Le Juge Gibson de la Cour de 1'chiquier d6finit la question A d6cider de la fagon suivante: La question A d6cider est de savoir si oui ou non ces transactions ont eu pour r6sultat de confdrer un avantage aux appelants au sens du paragraphe (2) de Particle 137 de la Loi de l'impdt sur le revenu; au cas oh la d6cision sur la question principale est affirmative, une question subsidiaire est de savoir si le montant de cet avantage devrait Stre cotis6 en vertu de Particle 8(1) ou de l'article 81(1) de la Loi de l'impt sur le revenu.
Soit dit en toute d6f6rence, il n'est ni utile ni souhaitable que la question soit d6finie en ces termes. Je crois qu'en l'esp6ce l'art. 81(1) de la Loi s'applique clairement et qu'il n'est pas n6cessaire d'exprimer une opinion sur la port6e de l'art. 137(2) de la Loi.
Il ne semble y avoir aucun doute que les nouvelles cotisations ont 6t6 faites en vertu de 'art. 81(1) de la Loi, en se fondant sur le fait qu'il y avait eu liquidation, cessation ou rdorganisation de l'ancienne soci6t6. Le Juge Gibson 6tait dans le doute A ce sujet bien qu'il ait exprim6 l'opinion que s'il avait eu h 6tablir la cotisation, it en serait venu A la conclusion qu'il n'y avait pas eu de liquidation, cessation ou rdorganisation de l'entreprise de l'ancienne soci6t6 au sens de 'art. 81(1).
Je ne suis pas d'accord avec cette opinion et je fonderais mon jugement sur cet article, et sur lui seulement. Ces cotisations devaient 6tre faites en vertu de cet article avec la consequence necessaire d'un d6grbvement aux termes de l'art. 38(1). Si je comprends bien, c'est ce que le fonctionnaire a fait.
La Cour de lIchiquier laisse le r6sultat intact, mais fonde son jugement sur 1'application des art. 137(2) et 8(1). Si ces articles 6taient apet al. Judson
SMYTHE et al. C. LE MINISTRE DU REVENU NATIONAL applied there would be no dividend tax credit.
There is an inconsistency here in the judgment of the Exchequer Court. I would hold that there was a winding-up and a discontinuance of the business of the old company, although it is apparent that there was no formal liquidation under the Winding-up Act or the winding-up provisions of the Ontario Companies Act.
I am content to adopt the judgment of
Maclean J. in Merritt v. Minister of National
Revenue :
I entertain no difficulty over the construction to be given the words "winding-up, discontinuance or reorganization," as used in s. 19(1) of the Act. In construing those words we must look at the substance and form of what was done here. In the case
In Re South African Supply and Cold Storage Company (1904) 2 Ch.D., 268, Buckley J. had to consider whether or not there had been a winding-up
"for the purpose of reconstruction or amalgamation,"
and he said "that neither the word reconstruction nor the word amalgamation has any definite legal meaning. Each is a commercial and not a legal term, and, even as a commercial term has no exact definite meaning." I think that would be equally true of the words of s. 19(1) which I have just mentioned. There was no "winding-up" of the Security Company by a liquidator, but there was in fact, I think, a winding-up of the business of that company and I think the word "winding-up" may be given that meaning here, although I need not definitely so decide because, in any event, there was a "discontinuance" of the business of the Security Company, and whether that was brought about by a sale to or amalgamation with the Premier Company is, in my opinion, immaterial. I therefore think there is no room for any dispute of substance but that the Security Company discontinued its business in a real and commercial sense, and that for a consideration it disposed of all its property and assets, however far that may carry one in deciding the issues in this case. There is, therefore, no necessity for attempting any precise definition of the words "winding-up, discontinuance or reorganization." What was done with the business of the Security Company fell somewhere within the meaning and spirit of those words. Neither do
I entertain any doubt that there was a distribution of the property of the Security Company among its shareholders, in the sense contemplated by s. 19(1)
of the Act, under the terms of the Agreement after
[1941] Ex. C.IL 175 at [1941] 3 DL.R. 115.
pliqu6s, il n'y aurait pas de d6grbvement pour dividendes. Il y a un illogisme dans le jugement de la Cour de I'tchiquier. Je dirais donc qu'il y a eu liquidation et cessation de l'entreprise de I'ancienne soci6t6, bien qu'il soit apparent qu'il n'y a pas eu de liquidation en bonne et due forme aux termes de la Loi sur les liquidations ou des dispositions de liquidation de l'Ontario Companies Act.
Je me contente d'adopter la d6cision du Juge Maclean dans Merritt c. Le ministre du Revenu national :
Je n'6prouve aucune difficult6 quant A l'interpr6tation h donner aux termes dliquidation, cessation ou reorganisationD tels qu'ils sont utilis6s dans Part. 19(1) de la Loi. En interpr6tant ces termes, nous devons consid6rer la substance et la forme de ce qui a 6t6 fait ici. Dans la cause In Re South African Supply and Cold Storage Company (1904) 2 ch. D., 268, le Juge Buckley devait d6cider si oui ou non il y avait eu une liquidation aux fins de reconstitution ou de fusion; il a d6clar6 (traduction) que ni le mot reconstitution ni le mot fusion n'ont un sens juridique d6fini. Chacun d'entre eux est un terme commercial et non un terme juridique, et m8me comme terme commercial n'a pas un sens exact. Je crois que cela serait 6galement vrai des termes de l'art. 19(1) que je viens de mentionner. Il n'y a pas eu de dliquidationD de la Security Company par un liquidateur, mais je crois qu'en fait il y a eu liquidation des affaires de cette soci6t6 et que ce sens peut 6tre donn6 ici au mot aliquidationD, bien que je n'aie pas A d6cider cat6goriquement car, de toute fagon, il y a eu cessation des affaires de la Security Company, et que cela ait 6t6 le r6sultat d'une vente h la Premier Company ou d'une fusion avec celle-ci est, A mon avis, sans importance. Je pense donc qu'il n'y a pas matibre a discussion quant au fond mais que la Security Company a cess6 ses op6rations au sens r6el et commercial, et que moyennant compensation elle a dispos6 de tous ses biens et avoirs, si loin que cela puisse nous mener pour d6cider de cette affaire. Il n'est done aucunement n6cessaire d'essayer de donner une d6finition pr6cise des mots <liquidation, cessation ou r~organisationD. Pour ce qui est de la Security Company on s'en est A peu pris tenu au sens et A l'esprit de ces termes. Je ne doute pas non plus qu'il y ait eu une distribution des biens de la Security Company entre ses actionnaires, au sens ohi l'entend 'art. 19(1) de la Loi, en vertu des termes de 1'Accord aprbs sa ratification par les 1[1941] R.C..de1't. 175 A [1941] 3-D.L.R. 115. 71, its ratification by the shareholders of the Security
Company. It is immaterial, in my opinion, that the consideration received by the appellant for her shares happened to reach her directly from the Premier
Company and not through the medium of the
Security Company.
This judgment was appealed to this Court and is reported in (1942) S.C.R. 269. This Court affirmed the conclusion of Maclean J. that there had been a winding-up, discontinuance or reorganization. The partial reversal of Maclean J.
was based solely on a different interpretation of the scope of the application of the then s. 19(1)
-namely, what taxation years it applied to.
Section 19(1) was the predecessor of the present s. 81(1) and for the purpose of these reasons, there is no difference between the two.
When this series of transactions was completed, the old company had preference shares of the two dividend-stripping companies-F. H. Cameron Ltd. and Dabne Enterprises Ltd.-in Vancouver, and no other assets. The assets behind the preference shares of these two companies were shares of companies which had been through the same mill as the old company in this case.
The plain facts are that at the end of all this activity
(a) the shareholders of the old company were shareholders in the new company in the same proportions as they held shares in the old company. They had subscribed for these shares and their position as such shareholders is not questionable.
(b) But when the old company transferred its assets to the new company, the total consideration should have been received by the old company.
(c) That consideration was $2,611,769. If the new company wished to secure the purchase price by debentures, these should have been issued and delivered to the old company. Instead, we find cash and debentures in the hands of the shareholders of the old company. There are appropriate ways of making such a distribution actionnaires de la Security Company. A mon avis, it importe peu que la contrepartie reque par l'appelante pour ses actions lui ait 6t6 transmise directement par la Premier Company et non par I'entremise de la Security Company.
On a interjet6 appel de ce jugement en notre Cour et il est consign6 A (1942) R.C.S. p. 269. Cette Cour a confirm6 la conclusion du Juge Maclean h 1'effet qu'il y avait eu une liquidation, cessation ou riorganisation. La cassation partielle du jugement du Juge Maclean est uniquement fond6e sur une interpr6tation diff6rente de la port6e de l'art. 19(1)
d'alors, soit A quelles ann6es d'imposition il s'appliquait. L'art. 19(1) est A 1'origine du pr6sent art. 81(1) et, aux fins de ces motifs, il n'y a aucune diff6rence entre les deux.
Lorsque cette s6rie de transactions a 6t6 termin6e, 1'ancienne soci6t6 avait des actions privilgides des deux soci6t6s l'ayant ddbarrassde de son surplus de revenu non distribu6, F. H. Cameron Ltd. et Dabne Enterprises Ltd. de Vancouver, et elle n'avait aucun autre avoir a son actif. L'actif garantissant les actions privil6gi6es de ces deux soci6tis consiste en actions de soci6t6s ayant parcouru le m8me chemin que l'ancienne soci6t6.
Les faits purs et simples d6montrent que, h la fin de toute cette activit6,
(a)
les actionnaires de 1'ancienne soci6t6 6taient actionnaires de la nouvelle soci6t6 dans la meme proportion qu'ils l'6taient dans l'ancienne soci6t6. 1ls avaient souscrit ces actions et leur position en tant qu'actionnaires n'est pas contestable.
(b) Mais, lorsque l'ancienne soci6t6 a transmis ses avoirs & la nouvelle, le paiement aurait dfi 8tre renis en entier A l'ancienne.
(c) Ce paiement 6tait de $2,611,769. Si la nouvelle soci6t6 d6sirait garantir le prix d'achat par des obligations, celles-ci auraient dti 6tre 6mises et livr6es A 1'ancienne soci6t6. Au lieu de cela, nous retrouvons le comptant et les obligations aux mains des actionnaires de I'ancienne soci6t6. Il y a des moyens appropri6s de faire but these ways would involve the payment of tax.
Particularly, there was no sale of the shares of the old company to the dividend-stripping companies. The shares were transferred to these companies, with a fee of $41,433, for the purpose of enabling them to perform certain shuffles with the cheques and bank drafts to produce the result stated in these reasons. Taxation cannot be avoided by the transactions that were put through in this case. The orderly series of moves made on the closing in Vancouver does not assist the appellants.
I would dismiss these appeals with costs and affirm the re-assessments made under s. 81(1).
Appeals dismissed with costs.
Solicitors for the appellant, Conn Stafford
Smythe: Edison, Aird & Berlis, Toronto.
Solicitors for the appellants, Conn Smythe and
Clarence H. Day: Stikeman, Elliott, Tamaki,
Mercier & Robb, Montreal.
Solicitor for the respondent: D. S. Maxwell,
Ottawa.
une telle r6partition, mais ces moyens comportent le paiement d'imp6ts. En particulier, il n'y a pas eu de vente des actions de 1'ancienne socidt6 aux soci6t6s qui l'ont d6pouillde de son surplus. Les actions ont 6 c6d6es A ces soci6t6s, avec des honoraires de $41,433, dans le but de leur permettre de faire certaines manoeuvres avec les chrques et traites de banque, pour arriver aux rdsultats cit6s dans ces motifs. L'imposition ne peut pas 6tre 6vit6e par ces transactions. La sdrie ordonn6e des mesures prises h Vancouver lors de la conclusion de l'opdration ne vient pas au secours des appelants.
Je rejetterais ces appels avec d6pens et je confirmerais les nouvelles cotisations faites en vertu de l'art. 81(1).
Appels rejetis avec ddpens.
Procureurs de l'appelant, Conn Stafford Smythe: Edison, Aird & Berlis, Toronto. Procureurs des appelants, Conn Smythe et Clarence H. Day: Stikeman, Elliott, Tamaki, Mercier & Robb, Montrial.
Procureur de l'intimi: D. S. Maxwell, Ottawa. V. et al.
Warren Mann (Plaintif)
Appellant;
and
Walter Balaban and
Fersu Hotel Limited (Defendants)
Respondents.
1969: June 10, 11; 1969: October 7.
Present: Martland, Judson, Hall, Spence and
Pigeon JJ.
Assault-Alleged unlawful assault by beverage room waiter causing severe injuries to customer- Contradictory evidence-Onus of proof-Whether jury misdirected by trial judge-No objection at close of charge-New trial.
The plaintiff arrived at the defendant hotel company's ladies' beverage room at about 6 p.m. and sat at a table occupied by a woman with whom he was living as man and wife. She had been there since about 2 p.m. About 9 p.m. a noisy altercation developed between them. The defendant B, who was the bar manager employed by the company, testified that on several occasions he asked them to keep quiet. He said that when their language "really got rough" he walked from behind the bar, put his hand on the plaintiff's shoulder and ordered him to get out. The plaintiff had no memory as to what occurred following the argument with his companion, but evidence given on his behalf was to the effect that B violently and without cause struck the plaintiff with the result that the plaintiff fell striking his head heavily on the tile floor. The evidence by B and supported by evidence of other customers was that he merely touched the plaintiff's shoulder and arms and drew him to his feet and then left him standing while he turned to pick up the plaintiff's jacket and the plaintiff, due to his intoxicated condition, fell to the floor and struck his head.
An action for assault against B and his employer was tried before a jury. The following question was answered by the jury in the negative: Did the defendant Balaban, without lawful excuse, commit an assault and battery on the plaintiff Mann? On the
Warren Mann (Demandeur) Appelant; Walter Balaban
Fersu Hotel Limited (Difendeurs) Intimis. 1969: les 10 et 11 juin; 1969: le 7 octobre.
Pr6sents: Les Juges Martland, Judson, Hall, Spence et Pigeon.
Voies de fait-Employd de taverne se serait livrg illigalement d des voies de fait sur un client-Graves et douloureuses blessures-Dipositions contradictoires-Fardeau de la preuve-Critique des directives du juge au jury-Aucune objection-Nouveau proces.
Le demandeur est arriv6 a l'h6tel appartenant A la soci6t6 d6fenderesse vers six heures du soir et il s'est assis h une table avec une femme avec qui il vivait en concubinage. Elle 6tait 1 depuis les deux heures de l'aprbs-midi. Vers neuf heures du soir, une bruyante altercation eut lieu entre eux. Le d6fendeur B, qui 6tait un pr6pos6 de la soci~td A titre de g6rant de la taverne, a d6pos6 qu'il leur a demand6 A plusieurs reprises de se tenir tranquilles. II a d6clar6 que lorsque leur langage devint r6ellement grossier, il est sorti de derriere le comptoir, a pos6 sa main sur 1'6paule du demandeur et lui a intim6 l'ordre de quitter les lieux. Le demandeur ne se souvient plus de rien aprbs la dispute entre lui et sa compagne, mais la preuve fournie en sa faveur tend A d6montrer que le d6fendeur B l'a frapp6 avec violence et sans raison, de sorte qu'il tomba A terre, sa tate donnant durement contre le carrelage. Le t6moignage de B corrobor6 par celui d'autres clients, est k 'effet qu'il a simplement touch6 I'6paule et les bras du demandeur, I'a dress6 sur ses pieds, et ensuite I'a laiss6 debout et s'est retourn6 pour ramasser la veste du demandeur qui, en raison de son 6tat d'ivresse, est alors tomb6 sur le plancher en se frappant la tte.
Le procks de l'action pour voies de fait intent6e au d6fendeur B et A son employeur s'est d6roul6 devant jury. Le jury a r6pondu n6gativement h la question suivante: le d6fendeur Balaban s'est-il livr6 sans justification l6gale A des voies de fait sur la MANN et al.
basis of this answer, the action was dismissed. On appeal, the Court of Appeal, by unanimous decision, dismissed the appeal. An appeal to this Court was taken solely on objection to the charge of the trial judge to the jury, the objection being that the trial judge misdirected the jury in saying that the onus of proof was on the plaintiff with respect to the issues of justification, lawful excuse and the use of reasonable force.
Held: (Martland and Judson JJ. dissenting): The appeal should be allowed and a new trial granted.
Per Hall, Spence and Pigeon JJ.: In an action for assault, it has been established that it is for the plaintiff to prove that he was assaulted and that he sustained an injury thereby. Then it is upon the defendant to establish the defences, firstly, that the assault was justified and, secondly, that the assault even if justified was not made with unreasonable force.
The trial judge did not put the case to the jury in accordance with these principles. In such a case as the present, where the evidence was wildly contradictory, the jury should be carefully instructed on which of the two parties bore the burden of proving a particular fact or establishing the particular issue.
The misdirection might well have affected the verdict and caused a miscarriage of justice. Therefore, despite the fact that no objection was made by counsel for the plaintiff at the close of the charge, the appeal should be allowed and a new trial granted.
Per Martland and Judson JJ., dissenting: The charge to the jury, in the light of the pleadings, the evidence adduced, and the agreement of the parties as to the issue to be put to the jury, was a proper one. In the circumstances, the jury was not called upon to determine whether a particular degree of force was or was not excessive. If the jury believed the story told by the plaintiff's witnesses, the force used was obviously excessive. If they believed the defendant's story, no assault had been committed at all. That was the position at the conclusion of the trial, and in the light of all the evidence the question of onus was no longer of any significance.
Furthermore, even if the charge could be said to be inadequate in relation to the matter of onus of personne du demandeur Mann? Sur la foi de cette rdponse, le demandeur a 6t6 d6bout6. Un appel devant la Cour d'appel a 6t6 i l'unanimit6 rejet6. Le pourvoi par devant cette Cour est fond6 uniquement sur une critique des directives du juge de premiere instance au jury, en ce qu'il aurait mal instruit le jury en lui disant que le fardeau de la preuve incombait au demandeur pour ce qui est des questions de la justification de l'acte, d'une excuse 16gitime et de l'application d'une force raisonnable. Arret: L'appel doit Stre accueilli et un nouveau procks accord6, les Juges Martland et Judson 6tant dissidents.
Les Juges Hall, Spence et Pigeon: Dans une action pour voies de fait, il est 6tabli qu'il incombe au demandeur de prouver qu'il a 6t6 attaqu6 et qu'il a subi un pr6judice de ce fait. C'est ensuite au d6fendeur d'6tablir la d6fense, soit premibrement que l'attaque 6tait justifi6e, et deuxibmement qu'aucune force excessive ou non n6cessaire n'a 6t6 employee. Le juge de premiere instance n'a pas donn6 ses directives au jury conform6ment a ces principes. Dans une affaire comme celle-ci, oa les t6moignages sont tris fortement contradictoires, le jury devait recevoir des instructions pricises sur la question de savoir laquelle des deux parties a Ia charge de prouver un fait particulier ou d'6tablir un point particulier.
La directive inexacte peut bien avoir influ6 sur le verdict et entrain6 une erreur judiciaire. Par cons6quent, nonobstant le fait qu'aucune objection n'a 6t6 soulev6e par l'avocat du demandeur apris les directives du juge, le pourvoi doit 8tre accueilli et un nouveau procks accord6.
Les Juges Martland et Judson, dissidents: Les directives au jury, h la lumibre des plaidoiries, des t6moignages apportis et de l'accord des parties sur la question A poser au jury, 6taient approprides. Dans les circonstances, le jury n'a pas 6t6 appel6 h d6cider si un certain degr6 de force 6tait excessif ou non. Si le jury 6tait convaincu de la v6racit6 de l'histoire racont6e par les t6moins du demandeur, la force employ6e 6tait indiniablement excessive. Si le jury admettait la version du d6fendeur, il n'y a pas eu de voies de fait du tout. Telle 6tait la situation A la cl6ture des d6bats. Compte tenu de tous les t6moignages, la question du fardeau de la preuve n'avait plus aucune importance.
De plus, mime si ces directives peuvent 6tre qualifides d'inad6quates en ce qui concerne le fardeau [1970J R.C.S.
Cases cited
- Minister of National Revenue v. Merritt scr-1942-269
Statutes and regulations cited
-
Unresolved citations
- art. 81(1)
- art. 137(2)
- 8(1)
- article 81(1)
- s. 105(b)
- s. 81(1)
- Section 81(1)
- subsection (2)